Report: Acti-Blizz contemplating iTunes rival, acquisitions

For a company that's skipping the E3 Media & Business Summit, Activision Blizzard sure is generating a lot of headlines. Less than 24 hours after becoming the world's biggest third-party publisher, the new company has reportedly revealed an initiative that could upend the music business.

Today, Activision Blizzard CEO Robert Kotick told the Reuters news service that his company is contemplating launching a digital music store similar to Apple's iTunes for use with its billion-dollar Guitar Hero franchise. Unlike the popular a la carte digital download service used by MTV Games and Electronic Arts' Rock Band, the proposed store would reportedly let players download original recordings as well as songs to play in the game.

"When you think about the potential for what we will be able to do together, there have not been many viable alternatives to iTunes," Kotick said. If you're downloading a song to play on your Guitar Hero, there's no reason why you can't download the performance also. ... When you look at Universal Music Group as having such a big slate of artists and a large catalog and such a well balanced presence over all the major territories in the world, there are plenty of opportunities."

While Kotick's comments are not a formal announcement of any iTunes rival, they are part of Activision Blizzard's new, more ambitious outlook. Instead of strictly competing against other publishers like nemesis EA, the new, Vivendi-controlled $19 billion company sees traditional multimedia conglomerates such as Time Warner and Disney as its rivals. Kotick called out Disney's Pixar animation studio, which just released the hit Wall-E, as vying for the same consumer dollars as Activision.

To help increase its share of the entertainment market, Activision Blizzard is also considering acquisitions, according to Kotick. "We'll have a bigger market capitalization, the resources of Vivendi available to us and the balance sheet of Vivendi available to us if there are appropriate transactions," he said. "The pace of consolidation has accelerated. It's still a fragmented business with lots of new competitors coming in the market all the time."